Shady Contractors

In my industry there are a lot of people who want the title and want the money but don't want to play by the rules. Unlicensed “contractors” aren't contractors, but they'll pass themselves off as one and will try, with every strategy and technique, to play the part. Recently I provided a bid to a potential customer. He made it clear from the beginning that he was going to hire either me or another guy. While my work looked great and my reputation was clearly positive the other contractor was one thing – cheaper. And in the world of remodeling cost savings can go a long way. After a few back and forth conversations with the potential customer he let me know a couple of things that I, thanks to the experience, know to be red flags. The first thing he told me was that the other “contractor” wanted to see my price. Not only was this degenerate willing to just “price match” he was also trying to tell the customer that he would include additional work for the same price. I sat back and thought about this for a day or two and one question kept popping up in my head. “How is it possible that he can offer that price with the required materials costing so much?” And then I realized – he can't. The other person, who I then became convinced was NOT a licensed, bonded and insured contractor, was not only trying to take potential business from me but he was attempting to scam a potential customer of mine. So I thought it was best to be honest with the potential customer. I let him know how to search for a license number to make sure this individual was properly certified. I also provided a price breakdown that included the actual costs of all necessary materials. And when I did so I provided the cheapest prices I could find. About a week went by and the potential customer contacted me to let me know he was ready to sign a contract. The morning of our appointment I explained all aspect of the contract with him and broke down the information included on the required notices (In oregon we have requirements for information that we MUST provide to the customer). At that point my customer chuckled a little and let me know that he took my advice – he searched for the guy on the CCB website. And what he found confirmed my initial thoughts about his license. He didn't have one. He used to, but it had long since expired. Now I do recognize that not all jobs require a license and some work, based on the project and it's cost, falls under a category that requires no insurance, bond or license. But at $4k+ this was not one of those jobs. Now that I had explained what the CCB does for contractors and consumers he felt much better about his decision of who to hire. I cost more and my schedule being booked out requires patience on his part but at the end of the day he knows that I'm held accountable and his hard earned dollar is protected. That brings me to my last point -

Everyone out here is fighting for a job. Some of us have what it takes and some of us don't. And at every turn there is someone out there trying to take what they haven't earned. A lot of companies will fight by being better; genuinely better. A better quality, a quicker job completion, competitive pricing – those are the ways that legitimate companies become better than the competition. But others try to undercut us. In this situation, as I explained to my customer, I honestly believe this “competitor” was going to end up doing one of three things. 1 - Asking for more money later, 2 – doing work that wasn't of a quality standard or 3- taking the money and never showing up later.

We've all heard the horror stories of customers being ripped off. The best way to protect yourself is to do the research. Even if a contractor is licensed, bonded and insured, what is their history? Do they have positive reviews? Have there been any complaints to the CCB? And at the end of it all, are they the type of person you would trust not only giving thousands of dollars to, but giving access to your home?

Take the time and do your homework. The cheapest is almost never the best. And while you might save money up front I guarantee that you will spend more money and time in the longrun when hiring a shady “contractor”.

Choosing Your Customers

I hear more and more customers talking about the number of appointments they needed to have and the number of contractors they had to meet with before finding the right person for the job. Whether I'm the 6th person in a two-month search for drywall work, or the first contractor a customer is meeting with for a flooring project, there is always one consistent aspect to the process – customers and contractor both have a perfect fit. A contractor with multiple employees, multiple vehicles, a warehouse and a materials distribution division will always cost more than an installer working solo to complete the same project. Flooring is a great example of this. It's the most basic idea of strength in numbers due to the tasks involved. If an outfit has three employees and is being run efficiently there will be an installer who assembles the flooring, a cutter who runs the saw, and a runner/assistant.

When I first started in residential remodeling I was installing windows and doors. It was not uncommon for us to have 3 or 4 installers on site, with each taking on a separate task. Our installation rates were higher than small firms but we could offer better prices on materials through a distribution agreement and we were able to accomplish whole-home installations in a week's time (sometimes less). If I were to accomplish the same number of tasks on my own the resulting quality of work would be just as good but the time it would take would be considerably higher. (For more on this please read my article on “Good, Fast and Cheap” by clicking here.)

Because of these ideas it's very beneficial for the customer to think about aspects such as cost, time-line and quality before looking for a contractor. Does your project require intricate tasks and a higher level of craftsmanship than basic installations? Are aspects of your install custom, requiring a higher level of knowledge than the basic install? How much time do you have before you need the job completed? Once you have a basic answer for these questions you can begin to look for the right person for the job. Use previous project photos to find the quality your project requires. Match styles and materials to what you see in a company's portfolio. Is their quality great but the specific style you're wanting isn't represented in their portfolio? You may find that their prices are cheaper than their competition and the quality is matched but there can be a considerable amount of extra time needed.

As contractors, we have to find customers that fit the description of what we're looking for. Not all business is good business. It doesn't benefit us any to commit to a project we will be unable to complete to the customer's expectations. Don't take projects you're not confident in. Don't accept every project that comes across your desk.. some will require more than you can give or some won't pay what your business needs to thrive and grow. This doesn't mean I would suggest being greedy. We should always find ways to offer competitive rates without undercutting ourselves, our competition or our customers. It never works out and always gets worse as the situation progresses. What I would suggest is to find your niche, which I look at not only as the trade or specialty you find the most talent and the best results in, but the trade or specialty that allows you to display your talents in the most competitive, honest and professional way. Consider the time it takes you to complete a task, the going rate for the service you're providing in your area, and the cost for you to complete the job. (Find more on setting prices by clicking HERE). If you're in the same ballpark as the competition, or even under the going rate, you will most likely find success in the industry. There are many ways of finding new leads and growing your customer base. To find out more click here to read our article on finding customers and contractors.

Remodel Nightmares - Episode 1 - The $80,000 Floor

In my industry we are constantly battling the stigmas left by those who are greedy, deceitful or, in some situations, outright criminal. We've all heard of the customer who paid $10,000 up front only to have their “contractor” take months to start the project, show up and do shotty work, or disappear altogether. These episodes, as I like to call them, will describe situations I've heard directly from customers, experiences I've witnessed first hand, or projects I've had to finish due to lack of experience, respect or discipline on the part of the contractor. My hope is that you can get comfortable looking for warning signs when discussing projects with any potential bidder, which will help you avoid the time, cost and emotional drain of finding yourself in a similar situation. For help and suggestions with finding a contractor please CLICK HERE to redirect to my article and contractor sourcing do's and don'ts.

Without further ado, I present

- Episode 1 - The $80,000 flooring project.

My most recent customer was a very nice elderly woman who was, for the most part, confined to her home due to health problems and the need for ADA accessibility to enter and exit her home. While building a deck and ramp for her to use I began, as I usually do, to get to know her better and hear some of her experiences with other companies in the remodeling industry. I was especially shocked when I asked why the seams of her laminate flooring were peeled back and the layers were separating.

“When the installers were done pressing the flooring onto the adhesive the glue came out through the seams and dried over the planks”. I was astounded. Not only did they use adhesive to install a floating floor, they used way too much, allowed it to dry and then attempted to scrape it off once it dried. Every step of the way this “company” showed that it's employees were not only inexperienced but they were uninterested in taking their job, and their customer, seriously.

I became more interested in the story so I had to ask - “How long did it take?”

“6 months” she said.

I stood there, mouth wide open in amazement at the fact that a manufactured home, no larger than 1600 sq ft, could have taken anything close to 6 months. At this point she began to tell me more about the experience. I'll paraphrase the way she explained it to me but the details of the installation process are the aspects I couldn't forget if I tried.

According to her, this company showed up and gave a bid of a few thousand dollars for installation. The initial amount is not relevant, as you'll see, when the final bill was presented. The first mistake the customer made was agreeing to the project based on a time and materials agreement. I say “agreement” because the contractor, if we should call him that, refused to provide any type of contract to the customer. So for those 6 months the contractor had anywhere from 3-5 employees working with him. He was charging $50 per person, per hour. For a group of 5 guys (including the GC) for 8 hours the total labor charge for one day is $2,000. Keep in mind that the flooring was click together laminate. At most, in my personal experience of working by myself in similar installations, the project would have taken me two weeks BY MYSELF. These guys showed up for 6 months. I cannot begin to guess what they were actually doing in that amount of time.
 

The worst part of this is the end. Once the project was completed, which in itself resulted in the flooring being damaged upon repair, the contractor gave my customer a bill for $80,000. It seems shocking but when you begin to do the math of $1,200-$2,000 labor charges per day, and a project in which the contractor would disappear for days, and sometimes weeks on end, in order to milk the clock and justify such extreme charges, the final bill does add up. What doesn't add up is how this person thinks it's acceptable to conduct a business, treat customers, or set his prices that way. In the end my customer let the contractor know that if he wanted to be paid he'd have to get it through her attorney. I was very proud of that, hearing that she drew the line and called him out on his business practices. But she was left with damaged flooring, which was new and should have looked great for years, thanks to this individual.

There are a lot of strategies you can use to avoid phony contractors like this. CLICK HERE to read our article on finding a great contractor and what to expect during the hiring process.

Remodel Nightmares - Episode 2 - The All-Inclusive Fence (nightmare avoided)

I was recently bidding on a fence project that wasn't “concrete” in the design. The customer wanted a bid for a fence, more than 150 feet long, and also numbers for a retaining wall. The retaining wall was 68 feet long and required a materials price of over $1,500. After I provided the customer with my bid he informed me of a few things. The first thing he said was that my work photos look great and he liked the reviews my company has. Then he hit me with the “bad news” - another contractor was able to replace the fence, as well as the retaining wall for the same price as my offer for the fence alone. At first I was frustrated at hearing this but after I took some time to think about the situation I quickly realized something was wrong. How could this contractor offer so much labor, and so much materials, at such a cheap price. I thought through the minimum cost for materials and started to see that the other contractor couldn't possibly offer that price and give the project the time it needed. Either he was cutting himself way too thin or he was planning (intentionally or not) to come back at my customer later for more money. So I did the best thing I could think of – I told the customer to dig a little deeper.

I'd like to begin this paragraph by saying I offer a very fair price. I'm far from the most expensive business in town but I'm not so cheap that I'm struggling to survive. My business is growing and I'm confident that the price I charge on a contract is what the customer will pay at the end of the project. So to protect myself and my customers I instruct a lot of them to do a little research before selecting their contractor. The first is to find average prices through various websites. More information on that can be found in our “How to Find a Contractor” and “What's a Fair Price?” articles. The second thing I suggest all potential customers to do is look up the contractor. A quick search through your state Contractors Board website will tell you everything you need to know about a company, with the exception of customer reviews. Which leads me to my last suggestion – check their website and available reviews.

I instruct most people to do things in that order for a few reasons. Checking the average price lets you know what the ballpark cost will be for a similar project. I say similar because every project is unique and every price list is a starting point. I tell people to check the contractor second to make sure they're properly licensed. I don't care if a contractor has great reviews if they're not licensed, bonded and insured, which is why looking for reviews is the last step.

Back to my story of the potential customer. After a few back and forth messages he chose my company and I scheduled an appointment to sign a contract and required notices. After a few minutes of our meeting he mentioned the other company - “So I did what you suggested and looked him up. Apparently he has insurance but hasn't been licensed in years”.. And there you have it. This “contractor” was trying to outbid me by cutting himself short. And while some people would be comfortable with the cheaper price this customer wanted to know why it was so cheap. Luckily for him he found out in the beginning, not at the end. Without the CCB there is very little protection for the homeowner. There is nothing to stop a person from taking money for materials and labor and never showing up. I can't say for sure that this would've happened to my customer but I'm glad that we don't have to find out.

So remember – Find the price. Find the history. Find the reviews.